New Delhi, January 31, 2017
The Economic Survey 2017, tabled in Parliament on Tuesday, projected that the country’s gross domestic product (GDP) will grow by 6.75 per cent to 7.5 per cent in in 2017-18.
Here are 12 highlights of the Economic Survey 2017:
- Demonetisation impact: The government says the adverse impact of demonetisation on GDP growth will be transitional. Real GDP growth in 2017-18 is projected to be in the range of 6.75 – 7.5 per cent, once the cash supply is replenished.
- Industrial growth to cool: Growth rate of the industrial sector estimated to moderate to 5.2 per cent in 2016-17 from 7.4% last fiscal. The agriculture sector to grow at 4.1 per cent in the current year up from 1.2 per cent in 2015-16
- Per-capita GSDP: Real per capita GSDP between 1983 and 2014 has shown across-the-board improvement
- Remonetisation: The Economic Survey 2017 has suggested quick remonetisation, push for digitisation, bringing land and real estate under GST ambit, reduction in taxes and stamp duties and an improved tax administration system as key reform measures to ensure long term economic benefits.
- States’ performance: There has been an improvement in the financial position of states over the last few years. The average revenue deficit has been eliminated, while the average fiscal deficit was curbed to less than 3 percent of GSDP. The average debt to GSDP ratio has also fallen. Centre’s Fiscal Responsibility and Budget Management (FRBM) Act, mirrored by Fiscal Responsibility Legislations (FRL) adopted in the States.
- NPAs: As per the Survey, gross NPAs has climbed to almost 12 per cent of gross advances for public sector banks at end-September 2016. At this level, India’s NPA ratio is higher than any other major emerging market, with the exception of Russia. The consequent squeeze of banks has led them to slow credit growth to crucial sectors-especially to industry and medium and small scale enterprises (MSMEs)-to levels unseen over the past two decades. As this has occurred, growth in private and overall investment has turned negative . A decisive resolution is urgently needed
- Asset rehabilitation: Survey suggests setting up of a centralised Public Sector Asset Rehabilitation Agency that will look after the largest, most difficult Cases, and make Politically Tough Decisions to reduce Debt .
- Poor targeting: According to the Survey, redistribution by the government is far from efficient in targeting the poor. The Survey points out that the capacity of the State in delivering essential services such as health and education is weak due to low capacity, with high levels of corruption, clientelism, rules and red tape. At the level of the states, competitive populism is more in evidence than competitive service delivery.
- Universal Basic Income: The Survey has advocated the concept of Universal Basic Income (UBI) as an alternative to the various social welfare schemes in an effort to reduce poverty. The Survey points out that the two prerequisites for a successful UBI are: (a) functional JAM (Jan Dhan, Aadhar and Mobile) system as it ensures that the cash transfer goes directly into the account of a beneficiary and (b) Centre-State negotiations on cost sharing for the programme.
- Property tax: A study done for the Survey shows that property tax potential is large and can be tapped to generate additional revenue at city level. Satellite imagery can be a useful tool for improving urban governance by facilitating better property tax compliance.
- Job creation: The Survey says Apparel and Leather industry are key to generation of formal and productive jobs: recommends reforms in labour and tax policies to make the Apparel and Leather sector globally competitive. The Survey adds that these sectors provide immense opportunities for creation of jobs for the weaker sections, especially for women, and can become vehicles for broader social transformation in the country.
- Labour migration: New estimates of labour migration in India have revealed that inter-state labour mobility is significantly higher than previous estimates. Relatively poorer states such as Bihar and Uttar Pradesh have high net out-migration. Seven states take positive CMM values reflecting net in-migration: Goa, Delhi, Maharashtra, Gujarat, Tamil Nadu, Kerala and Karnataka. Policy actions to sustain and maximise the benefits of migration include: ensuring portability of food security benefits, providing healthcare and a basic social security framework for migrants – potentially through an inter-state self-registration process.
[The Business Standard]